Optimism comes from big projects announced by the Brazilian government
Last Monday, as São Paulo suffered with strong winds and heavy rain, people attending to the 12th Brasilplast fair at the Anhembi Exposition Pavilion barely heard the noise of rain falling on the pavilion’s structure. Unlike other times, noise was reduced after an improvement that included placing a large vinyl blanket to protect the roof. “That shows how this product has flexibility of use”, said Instituto do PVC’s Executive Director.
While vinyl has several applications, such as making of blood transfusion bags or disposable items for healthcare, it is traditional usage for civil construction (ducts, pipes, windows, doors, floors, ceilings and even electric wires) that must see the most of vinyl’s growth in Brazil for the next years. During 2008, vinyl’s apparent consumption (production minus exports plus imports) in the country hit 1-million tons, 27% up as compared to the 820,000 tons in 2007, and almost 60% higher than ten years ago. In spite of the reduction expected for 2009 due to the slowdown resulting from the end-2008 crisis, the sector believes that this year’s volume must be about 6% lower than 2008, but will not return to the 2007 levels.
Optimism comes from big projects announced by the Brazilian government, in part as a result from PAC, Brazil’s Growth Acceleration Program, and “My Home, my Life”, a program aimed at building 1 million popular houses. Additionally to these projects is the big 2014 World Cup project, that envisages an intensive reformulation of stadiums and building of hotels by 2013, before the Confederations Cup when FIFA trials the host country’s structure.
Eyeing this huge potential, companies such as Solvay Indupa and Braskem run their capacity expansion projects. Belgium’s chemical group will increase its production capacity from 245,000 tons/year to 300,000 tons in 2009, reaching 350,000 by the end-2010. This production is all naphtha-based, but Solvay Indupa already runs a project to obtain sugarcane bio-ethene, which might aggregate more 100,000 tons to its capacity according to the need. The 500-million dollar project must have its new alcohol-ethene unit ready by 2011. Solvay’s Commercial Director, says that the company is investing as it believes in the country’s growth and the need of infrastructure-related products.
The Business Director at Braskem, agrees, and says that 1 million homes are still far from meeting the country’s needs. “It is said about 7 to 10-million homes gap, that is, this 1 million is just a sigh,” he said. But it is exactly this kind of “sigh” that made Latin America’s largest petrochemical company to resume its plans of doubling its capacity at the Alagoas plant, which had been postponed during the financial crisis. The basic project has already consumed the first R$ 20 million, and the new unit is estimated in US$ 380 million. The aim is to raise the capacity by 200,000 tons. “The 2008 crisis was an unavoidable event, but now we're going to duplicate the Alagoas plant at first, and expand the Bahia plant by 2013," he added.
Braskem Director says that the government programs will be a boost for low-income classes to “dream about their own home” again. What these Brazilian people dream about can turn into an even better reality for manufacturers, as vinyl can make up to 60% of items in a house. “And construction creates jobs, and then more income, which resumes the virtuous circle”, he said.
All of this has already begun converting into results. Compared to the last quarter of 2008, Solvay reported that vinyl sales in the three first months of 2009 have increased both in the Brazilian and Argentinean markets, with 8% and 15% respectively. Solvay Indupa’s consolidated net sales in the period closed in 470 million pesos, up 3.4% compared to the previous quarter.
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